Skip to main content

Thailand, emerging market shares rebound

Thailand's SET Index hasn't completely retraced its losses following yesterday's 15 percent plunge, but we did see something of a rebound in stock prices in Bangkok and emerging markets across the world.

As Bloomberg.com reports in, "Emerging-Market Stocks Gain; Thailand Rescinds Capital Control":

Emerging-market stocks rallied from the biggest drop in three months after Asian nations said they won't impose capital controls, less than 24 hours after Thailand's failed bid to limit foreign investment.

Thailand's SET Index jumped 11 percent in Bangkok after the government exempted equity from restrictions that had sent the benchmark on its biggest slide in 16 years yesterday, wiping out $23 billion in market value. Stocks in South Africa, South Korea, Malaysia and Russia rose, helping push the Morgan Stanley Capital International Emerging Markets Index, which tracks 25 markets, 1.3 percent higher.

Central banks in Malaysia, the Philippines and Indonesia responded to the rout in Thailand by saying they wouldn't use capital restrictions to control their currencies. That helped restore confidence after Thailand rescinded its rule.

``It's positive for emerging markets because it shows governments in this asset class are now quick to change unpopular decisions,'' said Matthias Siller, who helps oversee $6 billion in global emerging-market assets at Baring Investment Service in London. ``That wouldn't have been the case 10 years ago.''

So, some investors are heartened by the knowledge that other nations in the region and the emerging markets category might take this latest incident as a cautionary example. The message to policy makers: don't make hasty decisions that affect foreign investment and be quick to correct any such mistakes.

But for others, Thailand's sudden imposition of currency controls on foreign investors, and its subsequent action to reverse some of those measures, leaves a poor impression.

The policy reversal, a day after the new rules were announced, damages the credibility of Thailand's three-month-old government, led by former army chief Surayud Chulanont. International investors had increased stock purchases since a Sept. 19 coup ended seven months of political turmoil that disrupted government spending and dented consumer confidence.

``It makes investors doubt these people can manage the country,'' said Jorry Noeddekaer, who helps manage $1.4 billion of Asian stocks at New Star Asset Management Ltd. ``It would take a lot of good moves to rebuild credibility.''

Still, others are seeing the confusion as a good longer term buying opportunity in the months ahead. Some of the investors quoted in the Bloomberg articles above seem to think the rout could be forgotton in just that time frame.

Update: Investor Mark Mobius is largely unfazed by the recent turn of events in Thailand.

This will come as little surprise to those who recall his reaction to last September's coup; he was quoted then in a Bloomberg article saying such events were not unprecedented and that he would indeed be a buyer at depressed levels.

Here is Mobius in a recent interview appearance with Bloomberg TV, calling Thailand's share market "enticing". He also notes that while this latest situation has scared off many investors, it has not disuaded him from holding his investments.

Mark also echoes the view that this latest incident is something that could be forgotten in time, provided the same mistakes are not repeated by the government and central bank.

Popular posts from this blog

Seth Klarman: Margin of Safety (pdf)

Welcome, readers! Signup for free email updates at the Finance Trends Newsletter . Update: PDF links removed due to DMCA notice. Please see our extensive Klarman book notes below. New visitors, please check the Finance Trends home page for all new posts. Here's something for anyone who has been trying to get a look at Seth Klarman's now famous, and out of print, 1991 investment book, Margin of Safety .  My knowledge of value investing is pretty much limited to what I've read in Ben Graham's The Intelligent Investor (the book which originally popularized the investment concept of a "Margin of Safety"), so check out the wisdom from Seth Klarman and other investing greats in our related posts below. You can also go straight to Ronald Redfield's Margin of Safety book notes .    Related posts: 1. Seth Klarman interviews and Margin of Safety notes     2. Seth Klarman: Lessons from 2008 3. Investing Lessons from Sir John Templeton 4.

Moneyball: How the Red Sox Win Championships

Welcome, readers . T o get the first look at brand new posts (like the following piece) and to receive our exclusive email list updates, please subscribe to the Finance Trends Newsletter .   The Boston Red Sox won their fourth World Series title of t he 21st century this we ek. Having won their first Se ries in 86 years back in 200 4, the last decade-plus has marked a very strong return to form for one of baseball's oldest big league clubs. So how did they do it? Quick background: in late 2002, team own er and hedge fund manager, John W. Henry (with his partners ) bought the Boston Red Sox and its historic Fenway Park for a reported sum of $ 695 million. Henry and Co. quickly set out to find their ideal General Manager (GM) to help turn around their newly acquired, ailing ship. This brings us to one of my fav orite scenes from the 2011 film , Moneyball , in which John W. Henry (played by Ar liss Howard) attempts to woo Oakland A's GM Billy Beane (Brad Pi

William O'Neil Interview: How to Buy Winning Stocks

Investor's B usiness Daily founder and veteran stock trader, William O'Neil share d his trading methods and insights on buying winning stocks in an in-depth IBD radio interview. Here are some highlights from William O'Neil's interview with IBD: William O'Neil's interest in the stock market began when he started working as a young adult.  "I say many times that I didn't get that much out of college. I didn't have much interest in the stock market until I graduated from college. When I got married, I had to look out into the future and get more serious. The investment world had some appeal and that's when I started studying it. I became a stock broker after I got out of the Air Force."    He moved to Los Angeles and started work in a stock broker's office with twenty other guys. When their phone leads from ads didn't pan out, O'Neil would take the leads and drive down to visit the prospective customers in person.